CME says MF Global money still missing, wrongdoing suspected

• CME representatives could not offer new details about the whereabouts of the missing money, which is currently estimated to be just over $1 billion, but they did reiterate statements made in Congressional hearings that the crisis arose due to poor, and possibly illegal, decisions by MF Global rather than a lack of oversight.

From the National Association of Wheat Growers | Jan 20, 2012

A briefing this week held by the commodity futures industry’s trade association shed little light on how MF Global misplaced nearly $1 billion before its bankruptcy.

The session was sponsored by the Commodity Markets Council and included statements from Ann Shuman, a deputy general counsel for the CME Group.

CME representatives could not offer new details about the whereabouts of the missing money, which is currently estimated to be just over $1 billion, but they did reiterate statements made in Congressional hearings that the crisis arose due to poor, and possibly illegal, decisions by MF Global rather than a lack of oversight.

At the briefing, it was noted that CME was auditing MF Global in the week leading up to its bankruptcy because of the possibility that MF was going to be sold to another firm. During this audit, CME found a sizeable shortfall in funds that they first attributed to an “accounting error,” but later said may have been due to an illegal transfer of funds.

On Oct. 31, 2011, MF Global filed for bankruptcy protection, citing its $31.7 billion of debts against its $41 billion of assets, making it the eighth largest corporate bankruptcy in U.S. history. In its filing, the company also cited the fact it had made unwise decisions investing on European sovereign debt.

Customers with missing money have currently been compensated for about 72 percent of their account values, but there will not be any additional distributions until the end of the bankruptcy trustee process.

The current deadline for all commodity customers to submit claims to the trustee is Jan. 31, though MF Global’s bankruptcy court was set to consider on Thursday an extension to that deadline. The deadline for all non-commodity-related creditor claims is June 2.

NAWG is continuing to monitor the MF Global bankruptcy proceedings as the investigation into the missing funds continues, and NAWG staff attended the briefing this week.

The bankruptcy will also be a topic of discussion at NAWG’s upcoming winter committee and Board meetings.